Financial Information Worth Knowing
RRSP – Home Buyers Plan (HBP)
The HBP is a Canada Customs and Revenue Agency program that allows each eligible purchaser to withdraw up to $20,000 from their RRSP, including a spousal plan to buy or build a qualifying home for yourself. Starting in 1999 you can withdraw funds from your RRSPs under the HBP to assist a related disabled person by either using the funds to acquire a home for them or by providing the withdrawn funds for them to acquire the home.
- The HBP applies to both new and existing houses, condominiums, co-operatives and lots on which the
purchaser intends to build, which are located within Canada.
- The home must be occupied by the purchaser as a principal residence within 1 year from the
completion of the purchase date.
- The contract of purchase & sale must be entered into before the funds are withdrawn from the RRSP
- The purchaser must acquire a home prior to October 1st of the year following the withdrawal.
- You do not have to include eligible withdrawals in your income, and your RRSP issuer will not withhold
tax on these amounts. You can withdraw a single amount or make a series of withdrawals throughout the
same year, provided the total is not more than $20,000. If you buy the home with your spouse or other
individual, each of you can withdraw up to $20,000.
- You have to repay all withdrawals to your RRSP’s within a period of no more than 15 years. You will
have to repay a minimum of 1/15th, to your RRSP’s each year until you have repaid all the amount you
withdrew. If you do not repay the amount due for a year, it will be included in your income for that year.
- The HBP is not available if the buyer or their spouse has owned a home in the previous 5 years or they
have previously participated in the HBP program and have not fully repaid it by the preceding years end.
- The funds must have been invested in the RRSP for at least 89 days before they are withdrawn for use
under the HBP.
- Mortgage underwriters will require proof that the funds have actually been withdrawn from the RRSP.
(NOTE: Changes effective 16h February 2005) Property Transfer Tax (PTT) is payable by the purchaser or transferee at the time the application to register a transfer is presented to the Land Title Office. PTT is calculated as follows: First Time Home Buyers may be exempt from Property Transfer Tax if they meet ALL the following guidelines: (each applicant qualifies separately) - Mortgage must be for a term of at least 1 year (if term is less than 1 year the PTT must be paid and a - Mortgage financing must be at least 70% of the purchase price or fair market value of the property. This - Maximum principal repayment during the first year: - Purchaser must be a Canadian Citizen or a permanent resident (landed immigrant) and have resided in - Maximum purchase price (for full exemption) is: - Property must be owner occupied - Purchasers must begin occupancy within 92 days, and reside there for a minimum of 1 year.British Columbia Property Transfer Tax
1% of the first $200,000 of market value & 2% of the balance
rebate can be applied for after the qualifying individual has resided at the residence for 12 months)
amount may include financing that is assumed by the purchaser provided it is registered on title
(mortgage financing cannot be from a family member)
$13,000 for Greater Vancouver & CentralFraserValley
$10,600 for all other areas of BC
A pro-rated exemption is available where indebtedness is reduced to less than 70% of the purchase price
or where the principal repayment is greater than the above limits.
BC for 12 consecutive months immediately prior to the date of registration.
Purchaser must obtain permanent resident status within 12 months of the date of the transfer, or must
have filed 2 income tax returns as a BC resident within the last 6 years
$325,000 for Greater Vancouver & CentralFraserValley
$265,000 for all other areas of BC
For registration on or after February 16 2005 property with a fair market value of up to $25,000 more than
the limits noted above qualifies for a pro-rata exemption
A pro-rated exemption is available where the purchaser ceases to use the property as their principal
residence prior to the first anniversary of registration of the property
GST on New Home Purchases
- When you buy a newly constructed home, condominium, or townhouse, the entire purchase price,
including land, is taxable.
- Co-operatives, Mobile homes on land, and leases are also subject to GST.
- You may qualify for a partial GST rebate, depending on the purchase price.
- For residential purchases of $350,000 or less you will pay net GST of 4.48%.
- For residential purchases of $450,000 or more you will pay the full 7% GST.
- For residential purchases between $350,000 and $450,000 the GST rate is calculated at 4.48% plus
0.0252% for every $1,000 above $350,000. Take the purchase price and subtract $350,000 then divided
by 1,000 and multiplied by 0.0252 and add this figure to 4.48% to get the net GST figure.
- There is no GST on the purchase of a used residential property.
Here are some figures and the matching GST rate:
$350K - 4.480% $355K - 4.606% $360K - 4.732%
$365K - 4.858% $370K - 4.984% $375K - 5.110%
$380K - 5.236% $385K - 5.362% $390K - 5.488%
$395K - 5.614% $400K - 5.740% $405K - 5.866%
$410K - 5.992% $415K - 6.118% $420K - 6.244%
$425K - 6.370% $430K - 6.496% $435K - 6.622%
$440K - 6.748% $445K - 6.874% $450K – 7.000%
For more financial information
Contact TD Canada Trust Mortgage Manager:
Rick Marsh
(604) 764-7688
rick.marsh@td.com